Analysis Group Experts File Amicus Curiae Brief Regarding a Pharmaceutical Manufacturer's Freedom to Withdraw a Branded Product from the Market Prior to Generic Entry

March 02, 2015

On January 15, 2015, a group of prominent antitrust economists that included Analysis Group Chairman Bruce Stangle, Managing Principal Paul Greenberg, and academic affiliates Henry Grabowski of Duke University, James Hughes of Bates College, John Rizzo of Stony Brook University, Edward Snyder of the Yale School of Management, and Michael Wohlgenant of North Carolina State University filed an amicus curiae - or friend of the court - brief with the U.S. Court of Appeals for the Second Circuit in the case of State of New York v. Actavis plc, and Forest Laboratories, LLC. The brief was submitted by attorneys from Blank Rome LLP.

At issue in this case is whether Judge Robert Sweet of the Southern District of New York properly ordered a preliminary injunction requiring the pharmaceutical manufacturer Forest Laboratories (subsequently acquired by Actavis plc) to continue to manufacture and sell an older version of its Namenda Alzheimer's treatment. In 2013, Forest launched Namenda XR (extended release) capsules that allowed for once-a-day dosing and was also FDA-approved for applesauce dosing. Forest subsequently announced its intention to transition patients to the new Namenda XR capsule and to discontinue the older, twice-a-day immediate release Namenda tablet. In his preliminary injunction, Judge Sweet compelled Forest to continue to manufacture and sell twice-a-day Namenda until 30 days after generic versions of the Namenda tablet are launched in July 2015. In an accompanying opinion, the court wrote that it ordered Forest to keep its older product on the market so that generic competitors could better take advantage of laws requiring pharmacies to automatically substitute generic drugs for brand-name drugs. Under current FDA rules, pharmacies cannot automatically substitute generic Namenda tablets for Namenda XR capsules.

The authors of the brief address Judge Sweet's decision to invoke the antitrust laws to require a company to sell a product that it wishes to discontinue and for which it has a replacement product that it judges to be superior to the existing product. The authors contend that forcing Forest to produce Namenda beyond its natural life cycle and in tandem with its new generation Namenda XR product creates a precedent that undermines innovation in the pharmaceutical industry. In particular, the authors discuss how the injunction "imposes a novel barrier-to-exit on a brand name pharmaceutical manufacturer." The authors note that this precedent "compels firms to consider delaying or abandoning research and development into incremental innovations of their brand-name drugs to avoid facing similar barriers-to-exit." Their recommendation to reverse the injunction notes that "the decision is, to our knowledge, the first use of the Sherman Act to require the manufacture and sale of a product at a set price and quantity." The authors contend that the court's decision was particularly problematic because the Sherman Act was created to stimulate competition, not to promote specific competitors. They conclude that the injunction is "at its core, regulatory and not motivated by an interest in protecting competition."

Read the brief